Zeppelin Group stays on course Zeppelin Group secures high levels of market share due to healthy volume of orders despite difficult conditions

05.04.2016, Garching near Munich
  • Group sales: EUR 2.33b
  • Group’s earnings before taxes on income and earnings: EUR 81.2m
  • Average workforce over the year: 7,801 (including trainees)

Garching near Munich, April 5, 2016. The 2015 fiscal year was a successful one for the Zeppelin Group given the difficult market environment in many aspects in Russia and Ukraine. Group sales totaled EUR 2.33b (previous year: EUR 2.3b), while the Group’s earnings before taxes on income and earnings increased year on year to EUR 81.2m (previous year: EUR 71.6m). The average number of employees was 7,801 (including trainees).

As in the previous year, the crisis in Ukraine and Russia had a markedly negative impact on Zeppelin in the 2015 fiscal year. Through targeted measures and prudent action by management, the Group was nevertheless able to increase its earnings year on year despite the difficult market conditions. A healthy volume of orders in all strategic business units secured high levels of market share. Even in the territories served by the Construction Equipment CIS business unit, thanks to stable service business, profitability was ensured despite challenging market conditions and a contraction in the construction machine market of around 70%.

The Construction Equipment EU strategic business unit saw an extremely successful fiscal year. Market shares were further expanded and the machine population increased, meaning that the highest sales of the past four years were achieved. The Rental strategic business unit responded to the unfavorable situation in Russia and Ukraine by adjusting its business model and capacity levels. In 2015, the Power Systems business unit was hit particularly hard by the subdued demand from the oil and gas industry. However, demand for flexible energy solutions and combined heat and power plants showed a positive trend. The business unit also enjoyed successes in the cruise ship sector and with agricultural and construction machine manufacturers in the industrial engines area.

The Plant Engineering business unit maintained its good position on the market in 2015 and increased its profitability year on year, securing several major orders in the areas of manufacturing and processing plants for plastics. The course was set for further success by optimizing processes at international production sites and continuing to restructure operations in order to meet the needs of the different markets.

“In 2015, we coped well and developed our Group successfully, despite the many difficulties encountered. Particular attention was paid to the volatile markets of Russia and Ukraine, which have a major impact on our activities,” explains Peter Gerstmann, Chairman of the Management Board of Zeppelin GmbH. “By expanding new business areas and further developing the Group-wide finance and risk management system, we increased our earnings year on year,” says Christian Dummler, Member of the Management Board and CFO of Zeppelin GmbH. “Once again, we successfully demonstrated our solutions competence and improved our position as a provider of sustainable customer solutions. Our employees, who bolster the Group’s success even in challenging times thanks to their independent work and extensive expertise, play an important part in this,” says Gerstmann, summing up the year.

Digital transformation

In the 2015 fiscal year, the Zeppelin Group responded to the ongoing digitization with a large number of measures. For example, telematics, automated and GPS-supported machine control systems, and digital fleet management were given a more significant role in the solutions competence we offer our customers. We also continued to develop the start-up Klickrent GmbH founded in 2014. Via the online marketplace “klickrent” (www.klickrent.com), users can lease and rent machinery and equipment independently of manufacturers and dealers. The Zeppelin customer portal was further expanded to allow trouble-free ordering of spare parts, already enabling a third of spare parts sales to be made digitally.

Investments and finance

In the 2015 fiscal year, Zeppelin invested over EUR 180m in fixed assets, including rental stock, to expand its infrastructure. Further logistics capacity was added at the Achim site near Bremen. Despite the geopolitical situation in Russia, Zeppelin firmly believes that the country will once again be a reliable market for the products and services offered in future. It is therefore continuing to invest in this region and a new sales, service, and logistics center will be completed near Saint Petersburg by the end of 2017.

In the 2015 fiscal year, the syndicated loan provided by five core banks worth EUR 500m was extended early until 2020 with an option until 2022, and capital market issues were placed with a volume of EUR 93m. We took advantage of the favorable environment to hedge interest rates until 2025.

Outlook for 2016

Prospects for 2016 are mixed. The Zeppelin Group expects the business climate for the Construction Equipment EU business unit to be robust, as necessary investment in the upgrading of transport infrastructure is reviving the industry. With the existing portfolio of products and services and good market position, the Zeppelin Group will benefit from this positive environment.

No improvement is anticipated in the difficult geopolitical situation facing markets in Eastern Europe and the CIS. In view of persistently low commodity prices, the Group expects its customers to hold back from making new investments in oil and gas extraction. Growth is also forecast to remain weak in the core markets for Plant Engineering in Russia, South America, and China. However, the capacity adjustments due to the situation in Russia and the completed integration of Streif Baulogistik GmbH will relieve pressure on the operating result.

Zeppelin expects the earnings situation in Plant Engineering to remain stable. The lifting of significant parts of the sanctions imposed on Iran is expected to deliver a major boost to this business unit.

In 2016, the Zeppelin Group will continue to focus on further developing its position on the market on a sustainable basis and opening up new business areas. It will also pay particular attention to the digitization of the Group.